Diggi Multitrade Limited

Started in 2014, Diggi Multitrade Limited is the business of trading in fabrics, real estate and allied activities and construction material. They engaged in trading in real estate by way of acquiring interests in various real estate projects such as flats and land where they purchase the flat from the builders and is sold to a third party at a price higher than the price originally paid by them to the builder. They are also trades in fabrics and construction materials. They involved with dealing in construction material which they procure at the prevailing market prices and sell the same at a profit margin in the range of 5% to 10%. Company's business activities are concentrated in certain areas of Mumbai suburbs such as Mira Road and Naigaon. They are in process of establishing their presence in other areas of Mumbai suburbs. On financial performance front, DML has posted turnover/net profits of Rs. 0.60 cr. / Rs. 0.02 cr. (FY14), Rs. 2.07 cr. / Rs.0.03 cr. (FY15), Rs. 1.00 cr./ Rs. – (0.03) cr. (FY16) and Rs. 1.88 cr. / Rs. 0.06 cr. (FY17). Surprisingly, for the first half of current fiscal it has earned net profit of Rs. 0.24 cr. on a turnover of Rs. 1.83 cr. Issue is priced at a P/BV of 1.24 and 1.17 on the basis of its NAV as on 30.09.17 and post issue. For last three fiscals it has posted an average EPS of Rs. 0.05 and average RoNW of 0.39%. If we annualize latest earnings and attribute on fully diluted equity post issue, then asking price is at a P/E of 26 thus issue is aggressively priced. It has not listed peers to compare with as per RHP. On merchant banker's front, this is the 9th mandate from its stable in past three years. Out of last 8 listings 3 opened at discount, 4 at par and 1 with just 0.40% premium to offer price on the day of listings. Thus it has poor track record. As per financials, company's growth is zigzag (sudden jump in H1 FY18 net profit is surprising), RoNW is 0.39 % for last three fiscals and issue is very aggressively priced at P/E of 26 as per latest earnings. So, we give AVOID rating to this SME IPO.

• 1 Mr. VARUN DHANDH
• 2 Mr. GIRDHARI LAL SHARMA
• 3 Mr. ANIL KUMAR PATNI
• 4 GIRDHARI LAL SHARMA HUF